What CMOs Should Tell Board Members (and What Boards Should Be Asking)

February 14, 2019

PUBLISHED BY Christine Crandell

SOURCE CMS WiRE

Marketers have an opportunity to proactively help board of directors understand marketing — but most are missing out. I’ve sat in many board meetings over the past few years where the CMO presented slides full of detailed metrics on conversion, reach, mindshare and more without putting the information, which is essentially Greek to most of the board, into context.

Marketers, in short, need to speak board member’s language.

Christopher Faust, a life-long SaaS-industry CMO, pointed out that marketers typically present “beautiful charts but don’t answer the most important question of whether the sales and marketing team is adding pipeline at the pace needed to meet future total forecasts.”

Ken Klein, who sits on several boards, said board members lack the expertise to ask the right questions of marketing. Their backgrounds are typically in sales, finance or company founders. “Few of my peers come up through marketing and therefore don’t understand that marketing’s results is an early indicator of the company’s future performance,” he shared.

“Boards really only care about one thing — are we going to meet our number and do we have the coverage to get there. Marketing’s role should be to help simplify metric reporting to answer that question and prove marketing’s ROI,” said Faust. Part of the problem, he continued, is that marketing and sales present different pipelines and revenue forecasts. This creates confusion for the board and friction between the teams. “The metric of marketing contribution to sales is important, but meeting sales targets is most important. It doesn’t matter if marketing’s revenue contribution is 50 percent or 100 percent, if the pipeline and conversions are too low to meet targets, those numbers are meaningless,” said Faust.

What Marketers Should Be Presenting to the Board

When I attend board meetings, I look for specific insights from marketing which put their efforts in context:

  • Total pipeline forecast for next three quarters and actuals for the past three quarters.
  • Line of sight conversion for the buyer journey funnel — trigger event through purchase and renewal — by major market segments/buyers.
  • Marketing/Sales spend analysis and how it could be optimized to improve revenue, customer alignment and reputation.
  • QoQ and YoY changes in customer/SaaS cohort, buyer (lost/never considered), and influencer behavior patterns and marketing and sales’ joint action plan.
  • Market landscape changes, with a particular focus on disruptive risks from tangential/orthogonal markets.

CMOs can provide deeper context by presenting pipeline sources and the plan to achieve a quantified target growth rate. Faust is a big fan of presenting comparisons of forecasts to actual results for the past few years as they help clarify trends and provide context. He and I firmly believe that with any variance greater than 10 percent, positive or negative, marketing executives should partner with sales and customer success professionals to explain why.

What Boards Should Ask CMOs

There is no one-size-fits-all list of questions that boards should ask the CMO. The questions differ based on the maturity stage of the company.

Early-Stage Companies

Start-ups and early stage companies are in a unique situation: They are often pre-revenue and trying to figure out the right go-to-market model.

Bruce Cleveland, founding partner at Wildcat Venture Partners and author of “Traversing the Traction Gap,” said that for very early stage companies, “Boards should be focused on asking the team about what I call ‘market engineering’ tasks. These are tasks that must be completed such as ‘minimum viable category’ (category creation or redefinition), developing a thought leadership talk track about how you are going to transform the world, and what the initial sales talk track is, all while the company is still working on reaching MVP (minimum viable product).”

For companies that have achieved MVT, minimum viable traction, board-level marketing discussions should focus on high-level metrics. Cleveland stressed, “The focus should be on trends such as: CLTV (customer lifetime value), CAC (customer acquisition costs), NPS (net promoter score) and DAUs (daily active users).”  He echoed Faust’s point that marketing’s macro metrics should tell the board if things are on track or not.

Based on his experience, Cleveland argued that “Marketing be responsible for helping to forecast what the revenue will be in the next quarter; Sales should own the current quarter.”  Marketing should use lead conversions and other data to help the board and management team forecast future revenue. Most companies aren’t there yet.

Read the full article on CMS Wire.


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